Tag Archives: entrepreneur

Entrepreneurs: Optimists or Realists?

There’s no doubt that you’ve heard that most businesses fail.  When you look at the statistics, it’s very easy to believe that entrepreneurs are dreamers that either ignore the statistics or are just plain naïve.  If you knew 96% of companies fail within ten years, would you still do it?  We know entrepreneurs are smart and willing to take calculated risks, despite these overwhelming odds.  Do they even consider the realities of the entrepreneurial journey?

The first thing to realize about the odds of failure is that they are directly related to the amount of cash in the company.  Bill Camody stated in his article “Why 96 Percent of Businesses Fail Within 10 Years” that “cash is a fact.”  Once you don’t have any more cash, you can’t pay your bills.  This is a reality and certainly hits home very hard.  Now consider that the most significant source of funding for all business startups is the founder’s personal savings, which is roughly four times greater than any other source, according to the Kaufman Institute.  Venture capitalists and angel investors don’t engage heavily in startups.  If you’ve seen ABC’s TV show, Shark Tank, you know the sharks don’t like to invest in an unknown.  They want to see a cash flow before risking their money.  So, if you’re going to get money from others, either do it very early in the launch or you’ll have to grow the business before you can get a cash injection.

Most startups fail.  Most founders use their own money.  What can they be thinking? Do entrepreneurs overlook the realities of startups?  In a survey by Kauffman, many founders shared their thoughts on the factors that prevent others from creating their own startup.  These factors just might be the realities that one needs to consider (and constantly measure) when engaging in their own startup.

  • Risk – over 98% of respondents ranked an inability or lack of willingness to take risk as an important barrier to entrepreneurship.
  • Time and effort – 93% feel that entrepreneurs often underestimate the time and effort requirement to get their startup off the ground.
  • Capital – 91% identify the difficulty in obtaining capital as a major inhibitor, which may explain why most use their own money to start their new company.
  • Management skills – 89% cite management skills and the ability to start a company as critical to success.
  • Family pressure – 83% believe that family pressures to get a steady job and paycheck are real and challenging.

Other challenges mentioned in the survey include stress, maintaining a work-life balance, developing products and services for changing markets, government regulations, taxes, and the costs of employee benefits.

While it’s very hard to identify the right combination of the aforementioned factors that will lead to business success, there are some factors that will certainly lead to failure.  In a study by the University College London, it was found that businesses with entrepreneurs who held no real business experience did not increase profits.  The premise here is that nascent entrepreneurs don’t apply the appropriate weight to opportunities and threats.  In other words, their alertness to identifying threats and use of cognitive skills to recognize opportunities are not in balance.

Optimism has been shown to have a positive impact on entrepreneurial success, in terms of both actual firm growth and financial performance.    Realism, which also affects financial performance positively, is defined as the consistency between growth expectations and actual growth.  As with most entrepreneurs, and as verified by this study, optimism dominates over the impact of realism.

With regards to a balance of both optimism and realism, a dose of realism has the effect of modifying the overconfident cognitive bias of optimism.  For example, watching more cash flow out of your company than in for a long period of time has a propensity to dampen high expectations of future success, forcing one to reevaluate the current situation and cognitive strategy.  A lack of business experience can lead to a late recognition of this imbalance, resulting in failure.

In my experience, most entrepreneurs do a fairly good job of identifying threats and opportunities.  The things they incorrectly assess about them are the magnitude and timing, such as running out of money.   An important thing to remember is that most businesses are not creating something that hasn’t been done before.  There is a lot of literature, experience and information in the world.  Entrepreneurs should always seek it out and ensure they are correctly and constantly assessing their expectations, measuring performance factors (for a dose of reality) and maintaining just enough optimism to keep striving for their aspirations.  Additionally, before you begin to establish any expectations for your business, ensure you have fully applied your cognitive abilities to the factors mentioned above; that is, risk taking, funding, time and effort, management skills and family.

Startup Advice: Who/What/Where/When/How

I take advice from everyone.  It doesn’t mean I’ll use it.  I listen because I’m always interested to hear other people’s perspective on starting and running a business.  You never know what ideas people will give you (for free).  But when it really comes to advice that I plan to use, I’m very critical of the source I use.  And you should be too.

whoWHO DO I LISTEN TO?  It depends on what I want to know.  I always read what many experts have written on the particular subject before I go talk to people.  Being informed on the topic will help me filter out the “BS” people have a tendency to share sometimes.  Plus, it communicates to the expert that I’m serious about the situation and have done my homework, so I won’t be wasting their time.  Most experts want to be consulted, so they are happy to cull out a bushel of advice to help demonstrate their comfort with the subject.

Remember, you need advice you can use. It must be tried and true.  It must be applicable to your situation and spit out in terms that can be easily translated into action.  As for the people I pursue, they must have a few credentials that I can validate before I consider contacting them to ask for advice.  Here are some from my general list of traits.

  • Shares their experience (not too many years in the past).
  • Provides references to resources and people.
  • Offers actionable advice.
  • Respected in their field or industry.
  • Proven successful.
  • Share in a few fundamental beliefs: Faith, Family and Friends.

Don’t be afraid to ask anyone for advice, no matter how successful.  Recently, I had lunch with an alumni from my MBA school, Indiana Wesleyan University.  Evan is a financial advisor who just moved to Georgia and into my neck of the woods.  It never hurts to have such a fine, upstanding advisor in my corner.  Will I use his expertise?  You bet I will.  As you branch out to connect with the rich and powerful, realize it might take time.  The highly successful will just take a lot longer to connect with.  But keep trying.  My record is 18 months of continuous nagging. I think they felt sorry for me and gave me an hour of a billionaire’s time.  Wonder what that was worth?

whatWHAT DO I ASK ABOUT?  For me, this could be anything from the legal obligations of ADA, OSHA and E-verify to building the best marketing strategy.  I seek support as I need it.   Unlike the many executives I’ve served under over the years, I think it is very important to seek advice and get answers on anything that you don’t know about.  I’ve watched executives tank their company because they failed to reach out to experts to understand a part of the business that they didn’t.  Maybe it was pride or ego or just plain laziness, but a company’s existence depends heavily on its leadership’s knowledge base….and you never know enough!

For example, maybe you want to know how to distinguish your business from all of your competition, especially since you all seem to do the same thing.  I would say to you, “read the “Blue Ocean Strategy” by Chan Kim and Renee Mauborgne.”   In fact, I’ll send a copy of this book to the first two people who send me an email showing me that you promoted this post.  Running a great business is about finding the right answers and you must chase them vigorously. Your future depends on it.

whereWHERE DO I GET THE ADVICE I NEED?  I’ve found that the best advice comes from other business owners.  If you’re a startup, you probably don’t have a lot of connections to business owners.  Well, maybe you do.  My kids have been playing sports for years and now that I’m engaging in my own startup, I’ve just finally begun talking shop with the other kids’ parents.  I’m amazed how many are running their own business.  I never asked before because I didn’t have a real interest in their experiences, but I do now.  Business owners are great advisors because they can share real experience, not theoretical notions that you have to figure out how to apply.  Even better, they can connect you with other professionals they have worked with in the past, saving you considerable time in finding the support you need, such as legal, accounting, marketing, branding, strategy and funding.  You’re support is likely all around you and you don’t even know.  Take time to let people know what you are doing and what kind of help you need.  Many will be happy to help you succeed.

whenWHEN SHOULD I ASK FOR ADVICE?  This question is easy.  You ask for advice before you need it.  It takes time to really understand your issue in enough detail to ask a question.  You also want to ensure you do a little research to generate some potential answers to your question before you propose the question to an expert.  Then, you’re not really asking a question, you’re seeking validation of your ideas.  Professionals are more likely to respond positively to this scenario than an “out of nowhere” question from a stranger.  It also takes time for experts to respond to the question.  So you need to give yourself sufficient time for a response.  To improve your success in getting that valuable advice, choose times of the day where professionals are more likely to share information.  This includes early morning, the end of the day or after exercise when we are tired, as these are times when our defenses are down and we’re more likely not to think you might be a risk or threat.  Additionally, shared times of relaxation and enjoyment, such as during a golf game or a networking event, are great times to secretly tap into the minds of the experts.

howHOW DO I ASK FOR ADVICE?  There are several ways to approach this.  First, you can use mutual connections to make the initial pitch for you and setup the question for you.  Start with people you already know to identify potential experts who experienced what you’re preparing for.  Second, you can reach out to experts directly but you may want to hone a simple elevator pitch about your business that ends with the question that you so desperately need an answer. Third, you can invest in the experts you seek guidance from.  Most experts get tons of requests for information from people who want it for free.  We are all in the business to make money.  Show your expert that you have invested in them by purchasing their book, going to their seminar or promoted their work in some way.  Then, they’ll feel somewhat compelled to invest in you.  I would suggest that investing in the experts first is by far the best way to get the answers you seek.  It provokes feelings of reciprocity and will likely build a much stronger relationship that you can tap into for years to come.

My Entrepreneurial Journey: My Startup’s Brand

When starting out a new company, it’s important that you establish the purpose of the business in the customer’s mind.  Surely the purpose is to make money and no one will argue with that.  But what does your customer think?  Do they understand what your business is trying to do for them?  Not only does your brand tell your customer what you do, it also helps communicate direction and focus for your efforts.

When I began creating my business plan for the company, I added a section for the brand.  This section wasn’t heavily detailed but it was critical for providing some initial direction and focus.  It begins with a simple identification of what we are trying to do.  When it comes to companies, here are a few reasons they exist:

  1. A better way to do it.  We know people (and companies) are creatures of habit.  Once a process is put in place, it stays that way until it fails.  This leaves opportunity to create something better, especially as technology is developed.  Most often, a better way usually reduces operating costs or provides some other unique benefits to the company.

My potential customers:  There is a process in place for the service I provide.  My customers either don’t do it or do it poorly.  My service will replace the customer’s need to use their inefficient process with additional benefits that reduce cost.

  1. Something completely novel. In this case, a company provides a product or service that didn’t exist.

My potential customers: Since a process already exists, I’m not really creating something new to the market but I am creating a new solution for the customer that has financial benefits.

  1. A solution to a problem. Your business should always be solving a problem or filling a need.

My potential customers:  They don’t know they have a problem, which could be challenging for me.  I’ll need to educate them first and then sell them on the benefits of the service.  This will need a strategy all by itself.

While there are other business purposes, these three represent the majority of my purpose.  Some companies will use “transparency” as a purpose.  However, I consider that to just be a part of business.  I know there are proprietary things in the business but the way I conduct my business should be very clear.

With my purpose identified, I can use this information to identify my target customer.  I know they may or may not already do the service I’m offering.  I also know, through research, that they are not very good at it.  I have also found that many of these customers have financial problems, which makes the benefits of my service all the more desirable.  The key factors that define my customer:

  • Do perform the service I offer but aren’t doing it efficiently
  • Do not perform the services I offer
  • May be unaware of the problem
  • May have financial issues
  • May desire to create change in their current processes

Now that I have some idea of my customer, I can begin a little research by contacting potential customers by asking probing questions that can clarify my above assumptions.  After gathering a little information, I can prepare marketing information that speaks directly to this customer.

While this isn’t a complete development of a brand, it does provide considerable direction for me while defining the purpose of my company to the customer.

Disclaimer:  These posts are general ramblings from me concerning my own startup experience.

RISK VERSUS COMMITMENT

Starting your own business is fun and challenging in ways you never imagined.  I get a lot of questions about these challenges.  Most budding entrepreneurs are trying to estimate the barriers they’ll run into.  This assessment helps them understand the amount of risk they might face, which is a good thing to do.  But, I think they have the concept backwards.  In my experience, it’s your level of commitment that defines the amount risk you’ll encounter.  If you don’t invest much, you don’t have much at risk.

My kids love the TV show “Shark Tank.”  For me, it’s entertaining.  The Sharks have a lot of money, so the risk they take is small, considering it is only a fraction of the value they possess.  But for most of the small business owners on their show, the risk is much greater.  Well, most of them.  I do remember a recent episode when the Sharks asked the business owner how much she had invested in the company so far and she said not much because she was still working her day job.  I think Mark Cuban jumped out of his chair in shock and gave her the “I’m out” response after chastising her for her lack of commitment to the company.  Apparently, the Sharks believe you have to be “ALL in” to really achieve the success you desire.  Why? It shows everyone your level of commitment to your business and dream.  Sure, we can work in a job we don’t like but would someone really build a business that didn’t encompass their passions?

Napoleon Hill once said “Great achievement is usually born of great sacrifice, and is never the result of selfishness.”    For most entrepreneurs I work with, great success is their quest; more specifically, financial independence.  They seek the freedom such success affords.  After all, we only have so much energy to put into building dreams.  If we spend a lot of energy building someone else’s dream, we have little energy to build our own.  This is why Mark Cuban didn’t appreciate the young entrepreneur’s efforts in building her company.  This approach is attempted by so many professionals; that is, working for someone else while starting a company on the side.  We already know investors aren’t crazy about that idea, but what else could this approach be missing?

Just as an investor doesn’t think you can put all of your energy in a side business, an employer doesn’t think you can do your best in your job if you have a business on the side.  Employers will worry that each day you’ll be focusing on your company and not theirs.  It will threaten your job security, which might make your side business your only business.  If you have a business on the side, don’t share that with your employer.  Managers don’t have entrepreneurial mindsets and won’t understand that you can separate the two activities.

According to Forbes, 90% of startups fail.  Even when you start out under the best conditions, you’re likely to fail.  Yes, there are outliers that prove you can build a business on the side and then jump into it full time once it takes off.  But considering that 10% are successful, I would suspect that a small fraction of these started as sideline businesses.  While I’m not a big fan of side businesses, there is one reason you might try it.  Forbes identified the main reason startups fail.  Essentially, half of startups create a product no one wants.  However, starting your business on the side might give you sufficient time to assess the market for your product, especially if you don’t have the money to contract someone to do a market study for you and you have to do it yourself.  Taking the time to study the market will greatly improve your odds of success or help you keep from becoming another startup failure statistic.

Another challenge for part-time startups is the ability to truly focus your energies on figuring out how to reach your market and build a business.  Without employees, you’re forced to wear all hats of a business.  That can be overwhelming, especially when you realize that you are not an expert at many of them.  It takes time to learn about legal requirements, accounting, marketing, sales, and planning.  Now, consider that your day job may require travel and times of intense efforts requiring long work days, and you can begin to see how your startup could remain in startup mode for many years.  Eventually, it becomes easy to push off making decisions about your company because of other responsibilities.  Without sufficient consideration of issues, you run the risk of failing to consider everything you should consider which can result in poor decision-making.  For example, if your company began to grow to the point that you needed to contemplate going all in but were afraid to make that step because you didn’t have enough funding to pay your salary for a year or so, then you might not decide to get funding to grow the business.  So, you remain in your safe job and keep the business at a level of work that you can manage while you’re working your main job.  This is the risk versus reward scenario.  Little risk with earn you little reward.

As a sideline business owner, your risks aren’t too bad.  You already know most knowledgeable business people, especially investors, may not take you seriously, much less invest in your business.  Your startup time is likely to be very long (e.g. multiple years).  If time to market is important, you’ll likely miss it.  Also, the longer it takes to start, the more risk you have in your day job.  It gets hard to hide your real passion from everyone at work and telling the wrong person could bring your employment to an abrupt end.

As an “all in” entrepreneur, the challenges are much greater.  When I started that business, I forfeited my job.  I sold my house.  Moved my family and rented a house.  As I began, I felt I could earn business and move out of the startup phase in less than a year.  This sounds easy, right?  Its okay for first few months but when it begins to take longer, around months 7 through 9, your family and friends begin to wonder if you’re going to make it.  I began to wonder too.  But you can’t lose faith. The slightest crack will set off those around you and spin your world into a huge panic. Relationships can be easily strained, mounding more pressure on top of you. With no customers, will I need to tap into my own personal funds if I pass the first year mark without success? If I do, then all future plans could be at risk; vacations, cars for the kids, college, retirement and all of those luxuries we all enjoy.  But….if it does work as planned, the reward is much more than I can get working for anyone else in any given year.  No more 1 to 3% annual increases each year or that tasty spiral cut ham for Christmas.  I’m working for myself, pushing a business I built. With significant income flowing in, I can start building my own Shark Tank and diversifying my investments.  It’s chasing financial independence and as an entrepreneur, I can get there much faster.  And when I’m tired, I let my kids run it.  Yes, the risk is much greater, but so is the reward.

I’ve tried starting businesses both ways; part-time and full-time.  Full-time certainly has considerably more risk than the “playing it safe” part-time approach.  I think the decisions you make and the effort you put into your business are considerably different between the methods…and the results typically reflect that.  It’s amazing the energy you’ll put into a business when your next meal or rent depends on it.  You will become bolder, especially in the face of any adversity.  There are many things to learn and procrastination has a price that as a full-time, “all in” entrepreneur, you can’t afford to pay.  Success becomes your only option.  You strive very hard to gain that first customer so that you can call yourself a legitimate business.  Then, you have to learn how to take that first success and create more success from it.  It’s a never ending learning process.  As a father of three, starting a business is much like raising a child.  It takes effort…constant effort.  It’s painful.  It’s risky.  It totally changes your life.  Sure, you can raise a child with little effort but we all know what those results look like.

So, what you think?  Are you ALL IN?

The Plan-for-Planning Process – Step 4

Step 4 – How are we going to get there?

Typically called – “Strategies” – this section/chapter lays out the strategies that the company has developed to grow revenues and profits for implementation during this business planning period. You’ll want to answer all of the questions for each strategy to ensure full consideration.

The format for this section is (for every strategy):

  1. What the strategy is (a description of the strategy)?

2.  What the rationale is for the strategy (why we are implementing this strategy)?

3.  Who is responsible for implementation (a specific manager)?

4.  How long is the implementation going to take and what is going to be accomplished quarter-by-quarter (specific activities by quarter)?

5.  How much is going to be spent on each activity each quarter (a quarter-by-quarter listing of expenditures)?

6.  What is the expected return on the successful implementation of each strategy (the ROI for the strategy)?

When completed, this section should present a clear picture of what the management team plans to accomplish to continue to grow the revenues and profits for the company, and how much that will cost.

This section is particularly important because it lays out the quarterly strategic milestones that have to be reviewed on a quarterly basis, so that depending upon the success or failure of the expectations for each strategy for that quarter, decisions can be made as to how to continue to proceed strategy-by-strategy. And how to continue to allocate investments based upon these results.

This way management can better control the investments in the company’s future depending upon the levels of success or failure of each strategy on a quarterly basis.

The Plan-for-Planning Process – STEP 2

In this week’s post, Dr. Business continue with Plan for Planning process by discussing STEP #2:

Step Two – What will help or hinder?

Typically called – “Key Problems & Opportunities” – this section/chapter identifies short term (within the next year) problems that the management team must deal with/resolve, and short term opportunities that can be exploited over the coming year.

Problems and opportunities also come from the SWOT analysis described in Step One. Every company has short term problems and opportunities that need to be described in their business plan. To have a well done and complete business plan theses issues have to be highlighted with the actions planned to deal with them discussed in detail.

The format for this presentation and discussion is:

  • Description of the problem e.g. Training and development of sales personnel.
  • Action plan: Contract with a professional sales training company for quarterly one day detailed seminars on professional selling techniques.
  • Measurement: Individual salesmen’s improvement in their selling techniques as measured by: 1. Increased sales, and 2. Feedback from customer surveys.
  • Description of the opportunity e.g. Implement Customer Relationship Marketing (CRM) system.
  • Action plan: Research CRM systems for the one best suited for our business/marketplace during the first quarter.
  • Evaluate and select a system during the second quarter.
  • Begin implementation during the second half.

When done well this section/chapter of the business plan describes management’s proactive plans to deal with the problems and opportunities identified in the SWOT exercise. It represents positive actions that are being taken to deal with issues of critical importance during the first year of this business plan.

It should reinforce stakeholder’s confidence in the management team and motivate them to delve further into the longer range plans outlined in the business plan.

Ask Dr. Business – What is the first analysis an entrepreneur needs to perform?

In this week’s post, Dr. Business tells young entrepreneurs about the first thing they need to figure out when starting a business….and it isn’t what you think!

This week’s question:  What is the first analysis an entrepreneur needs to perform?

Dr. Business says:

You would think that anyone starting a new business would have a business plan – right? Wrong!

An even more basic is the need to develop a break-even analysis for their first year in business. When you consider that most entrepreneurs are using their own money and money that they have convinced relatives and friends to invest, shouldn’t they at least do some analysis as to how are they going to recover that investment, and at a minimum break-even for that initial year?

Every new business requires two levels of investment. The first just to get ready to do business, and the second the monies required to operate the business after you have opened the door. Even if you are only developing a new App, it costs money and time to develop and test the App. Then it requires more money and time to market the App. Hopefully, you will generate enough revenue from the App to cover these investments of time and money during the first year of operations. If not, then obviously you have lost money.

The question then is do you have enough money to continue the business? The statistics are that most new businesses fail within the first 12 to 18 months. Why is that? Primarily because there was no plan and as a result the founders ran out of money.

Let’s take something as simple as opening a bagel shop or pizzeria as an example. First, space has to be leased and constructed to accommodate the equipment required to make bagels or pizzas. Then, the equipment has to be purchased, installed and tested.  After which, the rest of the space has to be developed to accommodate customers, as well as adding a phone, fax, computer, and other equipment. This represents the initial investment just to be ready to make bagels or pizzas. Then ingredients have to be bought, employees hired, menu’s created, and some marketing and promotional materials developed to let prospective customers know you are in business. Once the doors are open, this second level of investments have been made, and will continue to accumulate as operating expenses.

Now the founders have to determine how many bagels or pizzas they have to sell every day, week, and month, to cover all the money that has been invested just to break-even, and is that possible? The question also remains “why should customers buy your bagels or pizzas, as compared to those of all of your competitors nearby”?

As this example illustrates, the planning that has to be done for any new business just to determine if it can break-even in the first year of operations is critical. It also demonstrates how easy it is for entrepreneurs to fail without doing this basic exercise before they begin.

Have you ever thought about how many bagels or pizzas your favorite bagel shop or pizzeria has to sell every day to make any money?

There is an old maxim: Nobody plans to fail…the just fail to plan.

ASK DR BUSINESS – How do I brand myself as an entrepreneur?

In this week’s post, we ask Dr Business about branding ourselves as an entrepreneur.

Question:  How do I brand myself as an entrepreneur?

Dr. Business says:

“The most successful entrepreneurs brands are a reflection of themselves e.g. Steve Jobs was Apple, and Apple was Jobs. Likewise, Ralph Lauren is Polo and Polo is Ralph Lauren, and Bezos is Amazon, etc., etc. Typically, entrepreneurs create a solution for a problem that they have themselves and pursue the commercialization of their solution with a passion that is a reflection of themselves. So, in essence they are the embodiment of the brand that they create.

If we take Jobs as the classic example of an entrepreneur that actually branded himself as an entrepreneur, he did that by coming up with one wonderful solution after another to problems that consumers did not realize they had until he delighted them with one neat new electronic i device before the last one was fully adopted. In so doing he embodied the epitome of cool creations. Others, like Bezos and Lauren continue to introduce new ways to delight consumers. I would say that the closer you can come to emulating these entrepreneurs and others the more obvious it becomes as to how necessary it is. 

The bad news is that you can’t copy these great brands easily. You can, however, execute the basic strategy. You must focus on doing things better or, better yet, uniquely. Demonstrate a passion for the details of your business more than your competitors do. Develop innovative ways to communicate and connect with your customers. Circle back and improve the things that can get better, and replace the things that can’t with something else. Then repeat this over and over. “

If you have a specific startup issue, share your problem with us and we’ll have Dr. Business assess it.   Send us your challenges at info@blitzteamconsulting.com

The Prime Mover Inside the Entrepreneurial Mindset

Years ago, I read Robert Kiyosaki’s book, Rich Dad, Poor Dad.  The book does a good job of explaining the mindset that holds many people back from ever becoming an entrepreneur.  Ironically, Robert’s story compares the advice of his academic dad (i.e. poor dad) and his entrepreneurial dad (i.e. rich dad).  Robert suggests that working hard and earning good grades isn’t the best advice anymore.  Working for someone else won’t lead to financial independence, which is where you’ll likely end up by earning a college degree and hoping for a corner office in a big company.  You’ll find that the people you work for aren’t willing to give up the good life or share much of it either.  The biggest gains go to the shareholders.

I can attest to Robert’s concept myself.  My dad was the employee with the great work ethic who worked in the same company for over 30 years and I was the son with all the college degrees.  Neither one of us found financial independence that way.  Today, the young professional mindset is changing slightly.  Professionals are getting the college degrees and then chasing the entrepreneurial dream.  They are using both paths.  The downside is that most of the lessons they get from academia and the parents who haven’t owned businesses still lack some important truths about entrepreneurs.  Here are the truths that will help you understand the makings of the entrepreneurial mindset.

Don’t just think about it, do it.  All through college, you spend your time solving problems that already have answers (i.e. they’re in the back of the book).  If you brave the world of graduate school, you’ll likely solve problems analytically because you can’t really test your solution in the real business world.  I think all of the analytical techniques are great to learn and easily taught by academia but it forces you into a state of analysis when you run into a situation for which you don’t know the outcome.  In other words, the more educated you are, the less likely you are to take risks.  Why?  Because you’ll spend too much time estimating the risk rather than just taking it.  Risk can also result in failure which could damage your “I’m a smart person” self-image.  If you plan to be an entrepreneur, you need to get over this idea and develop the “anything it takes” self-image.

“Entrepreneurship is neither a science nor an art. It is a practice.” – Peter Drucker, management consultant, educator, and author.

You won’t figure it all out.  Most startups don’t create a business or marketing plan before they launch.  So they don’t have a good picture of what resources and effort are really needed for the initial phase.  This leads to considerable effort figuring out how to do many of the activities that must be completed.  Another factor that makes this overwhelming is that startups also begin with as little resources as possible, which forces you to spend too much time on what I call non-value added activities.  For example, if you plan to use social media as part of your marketing plan and you aren’t good at it, find someone to do it.  You need to spend your time selling and directing the business.  This is why you build your plans before you launch.  The other benefit of building plans early is that you can do this while working another job.  Then, you can easily step out and launch the business.  There are a lot of benefits to planning early and defining who will do what. Plan it first and use expertise where you can find it.

You will fail, hopefully.  Most startups fail, roughly 9 out of 10.  Failure is inevitable.  This is worth saying twice.  FAILURE IS INEVITABLE. The key to overcoming the failure, at least according to the 10% of companies that succeed at startup, is versatility and teamwork.  Challenges and setbacks are a huge part of success.  They often put you back on the right track.  Versatility is the possession of numerous skill sets among your team.  If you’re launching your company alone, your versatility will be limited.  You might consider building a team or getting a partner.  Teamwork will then become vital in rebounding from setbacks and failures.

“You may be disappointed if you fail, but you are doomed if you don’t try.” Beverly Sills, opera singer

Be a punching bag.  As a business owner, you’ll get feedback from customers, vendors, suppliers, employees and investors.  The majority of this feedback will be unfavorable.  The success of your business will depend on how well you handle it.  You can’t become aggressive and fight it.  You can’t just rollover and accept everything either.  Feedback is some of the best learning you can get and most of the time is offered to you at no cost.  Soliciting feedback is the ideal way to extract information about your product and how well it meets your customer’s needs.  This is key in getting them to buy your product.  So why wouldn’t you eagerly accept this advice?  Don’t let your passion and ego get in the way of growing your business and allowing others to help you do it. You’ll grow faster that way anyhow. Just remember, every blow you get will only give you more information on how you are doing and will help you find ways to improve.  If you’re unfamiliar with making feedback actionable, check out this article at Entrepreneur.com.

Don’t make all the decisions.  Just as we discussed above, you’re not going to be able to provide all the answers to your questions, but you are going to feel compelled to answer them.  It’s your company after all.  Well, if this is what you’re going to do, you need to create as many habits as you can.  These habits will save you time so that you can focus on the tough problems.  One of the most important habits you need to develop is to reduce the number of decisions you make, especially the little things.

Even President Barack Obama avoids making the little decisions that don’t usually mean so much to the success of his business.  “You’ll see I wear only gray or blue suits. I’m trying to pare down decisions. I don’t want to make decisions about what I’m eating or wearing. Because I have too many other decisions to make.”  Focus on the major value adding decisions and create habits that don’t steal your time.  Again, this is best accomplished when it is laid out in a business plan.

There’s nothing easy about being an entrepreneur.  Those that can’t handle it become employees.  It’s not for everyone.  If you’re considering it, it’s critical that you establish the right mindset.  Remember, entrepreneurship is a journey, not an event.  It will be difficult and all consuming.  It will eat everything you have (e.g. time, money, energy, passion, drive, attitude) if you don’t adopt the right mindset.

Ask Dr Business – What are the biggest challenges in being an entrepreneur?

In this week’s post, Dr. Business address the following question:

What are the biggest challenges in being an entrepreneur?

Being an entrepreneur requires having a unique passion for your solution along with the willingness to commit the time and energy required to bring it to fruition in the form of a profitable business. Entrepreneurs also need to be able to accept rejection from the myriad of naysayers they will encounter along their way to success. Besides these fundamental challenges an entrepreneur has to be able to ask for help, which is typically against their nature and concern that someone will steal their idea.

Lastly, entrepreneurs do not like controls so they resist the need to develop a business plan. As a result, they encounter a variety of critical pitfalls that could have been avoided if they had only taken the time to go through the inexpensive and educational exercise of putting a business plan together before they started. Developing an even more fundamental break-even analysis for the first year of operations is also a challenge for many entrepreneurs. Without doing these basic business exercises many entrepreneurs exhaust their meager start-up funds and fail before they even launch their solution for a better world.

“Nobody plans to fail…they just fail to plan” – Doctor Business

TUNE IN NEXT WEEK FOR PROFESSOR ROBERT DONNELLY’S ADVICE FOR ENTREPRENEURS.